Nothing Lasts Forever: Dow Drops 150 Points as S&P 500 Win Streak Ends

Stocks ended their four-day winning streak with a bang today, after a shooting in Ottawa spooked the markets.

Getty Images The NYSE use to look like this. This is New York Mercantile Exchange.

The S&P 500 finished down 0.9% at 1,927.11 today, while the Dow Jones Industrial Average dropped 153.49 points, or 0.9%, to 16,461.32 and the Nasdaq Composite fell 0.8% to 4,382.85. The small-company Russell 2000 fell 1.4% to 1,096.87. The 10-year Treasury fell 8/32 to yield 2.23%.

CRT Capital’s Ian Lyngen isn’t sure Ottawa should be given credit for all the risk off activity–and notes that it didn’t help boost Treasurys:

Treasuries were under pressure throughout most of the session on a combination of slightly higher-than-anticipated headline CPI and improving global equity prices (at least in the morning).  The rally in stocks reversed following the headlines on the Canadian shootings – although the negative price action in TSY persisted. The geopolitical concerns and general apprehension stoked by the shootings were the most compelling connections being made with the price action; but given the ongoing risk-off factors from ISIS to Ebola, we're reluctant to point to a single factor for the broader move.

The folks at Bespoke Investment Group looked at examples of similarly volatile markets and come away recommending investors wait before buying:

While the S&P 500 averaged a range of 1.7% (median: 10.1%) in the initial 15 day period, volatility declined significantly in the ensuing four weeks as the average high-low range fel by a third to 7.9%, which is only 10 bps more than the average for al one month periods since 1983. Furthermore, there were only two periods (5/27/87 and 9/23/85) where the high-low range over the next four weeks was higher than the range over the initial three week period. In terms of the S&P 500's actual performance, the index has averaged gain of 1% (median: +1.7%) in the following month with positive returns 70% of the time. This is slightly better than the average one-month return of 0.8% for all periods since 1983. So if you missed out on the market's rebound, should investors looking to increase exposure add now or wait for a pullback? Based on the prior occurrences, a better entry point may lie ahead.

Is today the start of that better entry point or was it the better entry point?